London, 10 April 2014 -- Moody's today placed the ratings of Ypso Holding S.a.r.l
("Numericable"; CFR at B1) and those of its subsidiary Numericable
Finance & Co. S.C.A under review for upgrade.

The rating action follows the announcement that Numericable Group S.A.
("Numericable Group" or "the company"),
Numericable's parent company, has entered into a binding agreement
to acquire SFR S.A. (SFR), France's largest
alternative communications provider for EUR 13.5 billion in cash
and a 20% equity stake in the enlarged Numericable Group,
valuing SFR at around EUR 15.6 billion (before synergies and earn-out)
on an enterprise value basis.

The following ratings are placed under review for upgrade :

- the B1 CFR and B2-PD PDR at Ypso Holding S.a.r.l

- the B1 ratings of the senior secured notes at Numericable Finance
& Co. S.C.A (Numericable Finance) due in 2019.

Moody's has also assigned ratings to the transaction financing,
in particular a (P)Ba3 rating to Numericable Group's proposed new
5.6 billion EUR-equivalent 6-year term loan B (with
EUR and USD tranches), and a (P)Ba3 rating to the proposed new 6
billion EUR-equivalent senior secured notes with a weighted average
maturity of no less than 7 years (including EUR and USD tranches).
Proceeds from the issue of the new notes will be deposited in escrow until
the acquisition of SFR is consummated. A portion of the new term
loan B will be used to refinance Numericable's existing debt on
or around the issuance date for both new financings.

Ahead of the SFR acquisition, funds affiliated with Cinven Ltd.
and Carlyle Group, which currently together own 35% of Numericable
Group will transfer their holdings in Numericable Group to Altice S.A.
(Altice), Numericable Group's controlling shareholder (through
Altice France S.A. (Altice France), in a share and
cash transaction. Immediately following the share transfer,
Altice will hold or direct just under 75% of Numericable Group
(from 40% previously).

To fund the SFR transaction, Numericable Group will raise around
EUR 11.6 billion in new bank and bond debt and around EUR 4.7
billion of new equity. It will also refinance all of its existing
debt. Altice will take up around EUR 3.5 billion of the
new equity and EUR 1.2 billion will be publicly placed.
Moody's understands that all financings are fully underwritten.
This will result in Altice holding or directing 60% of the new
Numericable Group post closing of the SFR transaction, with Vivendi
holding 20% and public shareholders also 20%. Moody's
has also assumed that in case subordinated shareholder funding is introduced
to Numericable Group's capital structure at any stage, it
will meet Moody's criteria for equity-equivalent treatment.

Moody's aims to conclude its review upon completion of the transaction
at the latest, which is expected by the fourth quarter of 2014,
following conclusion of the deal's regulatory review. Moody's
currently anticipates that the review will result in an upgrade of Numericable's
B1 CFR by one notch to Ba3 and a transfer of the CFR to Numericable Group.
Before completion Numericable will be merged into Numericable Group with
the latter as the surviving entity. The anticipated upgrade is
subject to the transaction closing as currently laid out.

Moody's issues provisional ratings in advance of the final sale of securities
and these ratings reflect Moody's preliminary credit opinion regarding
the transaction only. Upon a conclusive review of final documentation
and of the ultimate outcome of the underlying transaction, Moody's
will endeavour to assign a definitive rating to the facilities.
A definitive rating may differ from a provisional rating.

RATINGS RATIONALE

The rating action reflects Moody's expectation that Numericable Group's
post-transaction operational profile will become stronger,
reflecting amongst other things the substantially increased scale and
scope of the new entity and the strong industrial logic of the proposed
business combination with significant cost savings potential. These
factors are counterbalanced by a continuing harsh operating environment
in the French telecoms market and the very substantial increase in debt
(in absolute terms) the new entity will incur, which Moody's
expects to result in leverage as measured by the Debt/EBITDA ratio (Moody's
definition) in the 4.0 to 4.5x range on a 2014 pro forma
basis. In addition, much of the new Numericable Group's
free cash flow after capex will be distributed to shareholders.
This is driven by Altice's need to cover interest payments on new
debt of EUR 4.2 billion at the holdco level and will weigh on Numericable
Group's rating.

Numericable Group and Altice have indicated that they expect to achieve
run-rate synergies of EUR 1.1 billion by the end of 2017
from capex savings (optimization of networks, fibre roll-out,
procurement), opex reduction (unbundling fees, sales &
marketing, network operations) and revenue synergies (broadband
up-selling to Numericable Group's products, improved
commercial efficiency in B2B). While Moody's believes that
material synergies should be achievable, the overall size of savings
and the timeline to achieve them still appear ambitious. Given
the scale of the integration task at hand, execution risk are also
material in Moody's opinion, notwithstanding the relatively
straightforward nature of some of the cost saving steps such as the closure
of the redundant part of the Numericable Group's network.
Large scale redundancies are not part of Numericable Group's cost
cutting arsenal. Indeed, the company is committed under the
terms of the deal to maintain employment levels at SFR, a commitment
that Moody's expects to be subject to close public scrutiny.
Finally, the agency expects that competitors will try to exploit
any operational upheaval during the integration period by aggressively
marketing Numericable Group's customers.

Moody's expects the operating environment in the French telecoms
market to remain difficult in the near term with limited visibility,
in particular for the incumbent mobile operators, including SFR.
SFR's continued steep revenue (-9.6% to EUR
10.2 billion) and EBITDA (-16.2% to EUR 2.8
billion) decline in 2013 reflects the evolution of product mix,
the impact of price cuts in response to the competitive environment,
in particular the disruptive entry of Iliad S.A. into the
French mobile market in early 2012 and tariffs cuts imposed by regulators
(reduction in termination rates). Against this backdrop Moody's
expects SFR revenues (before any synergies from the business combination
with Numericable Group) to decline further over 2014 and 2015, albeit
less rapidly than in 2012/13 before stabilizing in 2016.

Numericable Group posted a revenue increase of 0.9% (to
EUR 1.3 billion) for 2013. This was mainly due to the B2C
segment (+4.7%, accounting for two thirds of
total revenues) on the back of good take-up for the company's
new high specification set-top box ( "La Box"),
launched during Q2 2012. In the B2B segment (24% of total
revenues) revenues declined by 4.2% year-on-year
negatively impacted by the decrease in termination rates and the issuance
of EUR 10 million credit notes issued to corporate customers as compensation
for quality issues following the integration of Altitude Telecom.
Adjusted EBITDA declined by 0.6% and margins dropped to
46.9% from 47.5% in 2012. The strong
increase of the Group's B2C customer base came at the price of a
significant hike in subscriber acquisition costs (SAC were up 23%
in 2013 versus 2012). Moody's believes that the company's
strategy of accelerating the upgrade of its network to EuroDocsis 3.0
in order to continue to leverage its B2C broadband speed advantage over
DSL-based competing services will deliver future revenue growth.
Following the SFR acquisition this advantage can also be leveraged over
parts of SFR's customer base. In its analysis of SFR's historic
financials Moody's has also utilized information contained in Vivendi's
audited consolidated accounts.

The notes will initially be unguaranteed. The (P)Ba3 rating assumes
that following completion of the SFR acquisition both notes and bank debt
will be (within a period of 90 days) equally secured and guaranteed by
operating subsidiaries representing at least 80% of the new Numericable
Group's EBITDA. On this basis bank and notes debt are ranked
first in the company's capital structure (together with trade payables).
Given that there are no other material liabilities in the company's
debt capital structure, the new notes and bank debt are rated at
the expected Ba3 CFR level.

Moody's currently anticipates that Numericable Group's liquidity
profile on completion of the transaction will be adequate for its ongoing
operational needs. While cash on balance sheet is likely to be
minimal, Moody's expects the company to have access to a EUR 750
million revolving credit facility.

The principal methodology used in these ratings were the Global Pay Television
- Cable and Direct-to-Home Satellite Operators published
in April 2013 and Global Telecommunications Industry published in December
2010. Other methodologies used include Loss Given Default for Speculative-Grade
Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009. Please see the Credit Policy page
on www.moodys.com for a copy of these methodologies.

Numericable Group is the largest cable communications operator in France
and via its subsidiary Completel is the third largest provider of B2B
telecommunications services after Orange and SFR. For the year
to 31 December 2013, Numericable Group generated EUR 1.3
billion in revenues and EUR 616 million in adjusted EBITDA (as reported
by the company on a combined basis with Completel). Numericable
Group is controlled by Altice S.A (Luxembourg-based investor
in cable, media and telecommunications assets). SFR is active
in the broadband, fixed and mobile telephony segments, serving
the B2C, B2B and Wholesale markets in France. The company
generated combined revenues of EUR €10.2 billion and EBITDA
of EUR 2.8 billion for the fiscal year ended December 31,
2013.

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